A new study conducted by Rainmaker Information found that almost all of the tax concessions Australian’s receive for superannuation are being lost to commissions charged on Retail Super Funds – funds run by the big four banks and insurers.
These commissions – often secretive but worth up to $2.9billion per year – are paid for financial advice that many workers never receive.
The Industry Super Network (ISN), the body representing not-for-profit super funds that don’t charge commissions, estimated these fees could be as high as $1 out of every $8 contributed to retail super funds each year.
What’s more, it is estimated that more than 2 million fund members pay commissions for services they never receive.
ISN chief David Whitely states that these charges should be abolished immediately. Rainmaker estimates that the big four banks and two insurers receive about half of all the commissions paid by investors, including:
- AMP-AXA earns $1.1 billion
- ANZ earn $600 million
- NAB earns $500 million
- CBA earns $500 million
- Westpac earn $400 million
- Count Group earns $300 million
With an overview of Australia’s superannuation system due in 2013, a government proposal to introduce “opt-in” provisions is strongly supported by both the ISN and Rainmaker Information.
This means Retail Super Fund members would need to opt-in to paying the commissions if they want to receive financial advice – while those who don’t choose to pay for the advice would not be charged the fees.